Dealmakers Shift towards Rapid High-yield Bond Sales
Monday, March 28, 2011 12:45
Before the credit crisis, loans were favoured to finance leveraged buy-outs, which typically use more debt than other corporate deals. Banks would give companies several months to refinance the loans, which is known as bridges, with bonds. However, in the wake of the crisis, banks were left with billions of loans to such highly levered companies, having been unable to syndicate them on to a wider group of lenders or refinance them with bonds as markets froze.
European leveraged take-overs are increasingly being structured to allow for the immediate sale of high-yield bonds to reduce the costs and uncertainties in deal-making. The UK independent retailer–Phones 4U, sold GBP430 million of bonds on Thursday within days of the sale itself.
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